Bitcoin Is Significant Economic Innovation: Allaire

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Nov. 18 (Bloomberg) -- Circle Internet Financial Founder and CEO Jeremy Alaire discusses the innovative importance of bitcoin on Bloomberg Television's "Market Makers." (Source: Bloomberg)

What message do you want to get to lawmakers today?

I think there is a couple of key messages.

The first is that digital currency and bitcoin represents what i believe is one of the most significant and technical economic innovations of our time.

It holds great promise to reduce friction and transactions to lower costs for merchants, reduce fraud risk and facilitate a greater ease-of-use of our system for users all around the world.

At the same time, it is really critical that regulators and law enforcement are able to do their job and enforce policies that we have on the books today to an sure that we know the identities of our users, that we're are able to monitor transactions, report suspicious act to the t and work with law enforcement to navigate what is a significant and emerging phenomenon.

Jeremy, is there a model right now for how -- i know shall not be a perfect model, but is there a model for how the digital currency might be regulated?

Earlier this year, the department of treasury issued guidance from its division which established that bitcoin operators such as a circle would be regulated as money transmitters and services, that we would need to comply with regulations established through the bank secrecy act, around stopping criminals, reducing fraud, i think there has already been a positive step forward.

There are other pieces that are important.

Both businesses and consumers need guidance from the irs as to how to account for income they receive in digital currency.

That is something critical we need to see.

There are positive steps that have been taken.

We are in the early days here.

I am very encouraged if transactions take place offshore and if those are never converted into a currency and regulated account, how can any government know what is going on?

What is critical is here on an international basis we need to establish clear ground rules for money services that act as exchanges between local currency.

Similar efforts are put into place on a worldwide basis.

We have to make sure there are not leaky valves here.

To regulators even know what to do here?

What is the closest thing to bitcoin they have had to tackle in the past?

It just seems so foreign.

This is clearly very new.

I think it has come together because of advancements in mobile devices, and in digital signature technology, it makes it cost-effective to run these systems.

A lot of this is doping on top of pillars that have been built over the past five to 10 to 20 years.

The closest that some people would use would be a system like paypal or a service like western union.

As a result, it introduces a fee structure which is often times considered to be cost prohibitive.

There are many aspects and comparisons.

There is no single easy comparison here.

Aquatics doesn't the fundamental anonymity of the bitcoin architecture make it impossible to know what is going on, so to speak, in the bitcoin world if you take certain steps to prevent your identity from being this close?

Lex talk to the tooth fairy.

Sure.

Id., this is something that banks on a worldwide basis have to deal with already.

If i walked into the bank and said, i want to withdrawal $100,000 in cash.

That would get flagged and be investigated and that transaction would be limited potentially or better understood at a minimum.

That is only if the bank is operating in a jurisdiction where somebody is paying attention and there are reporting requirements.

There are places in the world where presumably the bitcoin exchange could set up shop where it does not face those restraints.

Right.

This faces the catch currencies today on a very large scale.

We know hundreds of billion dollars of new u.s. bills are printed each year.

We do not know who is using that cash and it is an anonymous currency.

These issues face our society today.

I think the benefits of moving to digital have the ability to enhance law enforcement.

Analytics can be applied and tools can be created.

With creative participation from the development community, we can improve the safety of the system for consumers and businesses as well as ensuring that actors have a difficult time operating on this platform.

This text has been automatically generated. It may not be 100% accurate.

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